How Many ESG Rating Agencies Are There?

Environmental, Social, and Governance (ESG) criteria are standards used to assess a company’s operational impact beyond traditional financial performance. These criteria categorize a company’s efforts and influence across three main areas: environmental stewardship, social responsibility, and corporate governance. Environmental factors evaluate a company’s energy use, waste management, pollution control, and conservation initiatives. Social considerations examine a company’s relationships with its employees, suppliers, customers, and the broader community, including aspects like human rights and labor practices. Governance assesses the company’s leadership structure, executive compensation, audit practices, internal controls, and shareholder rights, ensuring ethical and transparent management.

ESG rating agencies evaluate and score companies based on these criteria. They gather data to provide insights into a company’s ethical practices, risk exposure, long-term sustainability, and compliance with various standards. Their assessments help stakeholders, including investors and customers, make informed decisions about a company’s commitment to responsible business practices. The influence of these agencies has grown as the market increasingly demands transparency in non-financial performance.

The Dynamic Nature of the ESG Rating Market

The number of ESG rating agencies is not static; it continuously evolves within a dynamic market. This fluidity stems from factors like increasing investor demand for ESG data to inform decisions. The market for ESG ratings, valued at approximately $2.02 billion in 2023, is projected to grow to about $6.59 billion by 2031, reflecting accelerating interest. Diverse needs for specific ESG insights, such as sector-specific analyses or thematic evaluations, also encourage new analytical approaches.

Mergers and acquisitions frequently reshape the market, as larger financial entities integrate specialized ESG capabilities, while new entrants continuously emerge. The absence of a single, universally standardized ESG rating methodology also contributes to this dynamic environment. Different agencies often employ proprietary methodologies, weighting various ESG factors differently, which can lead to divergent scores for the same company. This lack of uniformity means there is no single, fixed count of agencies, as the landscape shifts with new providers, consolidations, and evolving service offerings.

Key Players in the ESG Rating Landscape

Several major organizations have established themselves within the ESG rating market, providing assessments that influence investment decisions globally. MSCI is a leading provider of ESG ratings, evaluating companies based on their exposure to ESG risks and their capacity to manage those risks. MSCI’s ratings, which range from AAA to CCC, cover over 17,000 issuers and nearly one million securities worldwide, focusing on financially relevant sustainability risks. Their approach helps investors understand how companies compare to peers in managing industry-specific sustainability challenges.

Sustainalytics, a Morningstar company, is another entity that assesses corporate exposure to ESG risks. This agency provides scores based on a company’s preparedness, management systems, and any controversies, utilizing an ESG Risk Ratings framework that categorizes risks into five levels. Sustainalytics covers over 16,000 companies, offering insights into material ESG issues that could affect a company’s economic value. Their methodology focuses on unmanaged ESG risks, providing a consistent measure for investors.

S&P Global also holds a position, integrating ESG analysis with its established credit rating expertise. The S&P Global ESG Scores measure a company’s performance on ESG risks, opportunities, and impacts relative to its industry peers. Their Corporate Sustainability Assessment (CSA) is a foundational tool for evaluating corporate sustainability performance. Moody’s ESG Solutions provides a range of ESG and climate risk solutions, including ESG scores and analytics, and incorporates the expertise of firms like V.E (Vigeo Eiris).

Other notable providers include Sustainable Fitch, Bloomberg ESG Data, FTSE Russell, and Institutional Shareholder Services (ISS). These agencies contribute to the market by offering diverse perspectives and data sets, such as Bloomberg’s real-time ESG data and analytics or EcoVadis’s focus on supply chain sustainability. Each serves a broad market, providing insights into corporate ESG performance for a variety of stakeholders.

Specialized and Emerging ESG Rating Providers

Beyond major established entities, the ESG rating ecosystem includes specialized and emerging providers that contribute to the number and diversity of agencies. This broader landscape encompasses niche or thematic agencies that concentrate on specific aspects of ESG, such as climate change impact or human rights, rather than a broad spectrum. For example, organizations like CDP (formerly Carbon Disclosure Project) focus on environmental disclosures, while EcoVadis specializes in supply chain sustainability assessments. JUST Capital evaluates companies based on social and environmental causes.

Regional or local agencies provide expertise within particular geographic markets, addressing unique regulatory environments or cultural contexts. While not as globally recognized as larger players, these regional specialists are important for localized insights into ESG performance. Many companies primarily known as data providers have expanded their capabilities to offer ESG ratings or scores. Bloomberg, for instance, is a financial data giant that also provides ESG data and analytics services. LSEG Data and Analytics, previously known as Refinitiv, offers detailed ESG profiles for thousands of companies.

The continuous influx of new players, particularly startups, diversifies the market, often leveraging innovative technologies. Companies like Novata are developing ESG platforms specifically for private markets, while Measurabl provides ESG management tools for commercial real estate. Other emerging firms, such as Planetly and planA, focus on carbon management and CO2 emissions monitoring. Many of these new providers integrate advanced analytics, including artificial intelligence and machine learning, to offer real-time insights and automate reporting processes, ensuring the number of ESG rating entities remains high and evolving.